Archive for May, 2012

On Facebook and their IPO
May 21, 2012

Some of this discussion shows a fundamental misunderstanding of online advertising and data collection. I’ll explain shortly, but first, my thoughts on the IPO.

I’m actually fairly bullish on FB stock, just not at this price level. 100x earnings and 100 billion dollars? Essentially the stock offering priced out at least 2 or 3 years of growth. Good for those that already had options, but there is a ceiling on what the stock can do for a while. IMO they could triple their revenue/earnings and the stock might not move at all. If it gets down to 23-25 or so I’ll be buying as much as I can.

Anyway, the discussion about paying for the service or charging for business pages is silly. Similarly silly are all of the recent articles about people not seeing any return from FB ads. This should come as a surprise to no one – for ads to work, the person viewing them has to be complicit in receiving the message. Ads work on Google because when people go to Google they are almost always LOOKING FOR SOMETHING. Google’s ad platform monetizes them finding what they need. Facebook does no such thing. Visitors to FB do not go to FB to shop, they go to stalk ex-girlfriends and post pictures of their pets or whatever.

I don’t think anyone (including the FB people) think that their on-site ad platform is ever going to generate much revenue. But the point of the on-site ad platform may not be to generate revenue but rather to dial in the ad platform itself. The FB-based ad platform is a testbed/sandbox for FB to match ads to people and test algorithms and such….

…which leads to how FB is going to make a zillion dollars.

Recently, FB changed their ToS to allow FB to track you when you are not on the FB site. THis means that when you go to another browser window or a different site, FB has the ability to follow you. So everywhere you go on the internet, FB is able to go with you and the treasure trove of data they have is with them. Which is why they will be launching an AdWords/AdSense competitor in the not too distant future. They don’t care about making money off of you while you’re on FB (outside of teenagers buying virtual goods in games). Rather, they give you the FB platform to use for FREE so they can collect scores of information about you. Eventually they will have a platform for publishers that delivers on site revenue to publishers like Google does, only the ads they serve will have higher conversion rates because they are REALLY atuned to you and your likes and dislikes, more so than Google.

The challenge FB faces is time of engagement on the site, not so you might click on an ad but so they have time to collect more info about you. They need “horizontal” engagement….right now that average FB user is on the site less than 4 minutes a day IIRC. The longer you are on FB, the longer your friends are on, the more data they can collect about what ads to serve you on their new ad platform. By creating the app store a couple weeks ago, they are opening the door up for the same creative types that made the Apple app store so successful to come in and make the FB ecostystem full of new games and business services and tools and other stuff…..all things intended to make you come to facebook more often so they can collect more data and thus make more money when you leave FB.

People talk about their challenge in mobile being about monetizing a mobile site, which is silly. They don’t need to run ads on a FB app…they just need to make it full featured enough that you interact with it the same way you interact with FB on the desktop. They bought Instragram for this reason. They will continue buying properties that people engage with. Not so they can run ads on those properties, but so they can get more info about you.

The stock will slowly slide for the next 6-18 months. And when the ad platform is announced the stock will double in a week. Black dot it, put it ink.


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May 3, 2012

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How Blackberry can Save Itself
May 1, 2012

Today is the start of Blackberry Jam, which is RIM’s big kubaya with developers and such. If you know the pain RIM has dealt with in the last three years then you know that the company is likely less than a year away from being sold for parts. A quick summary…

Everyone used to use Blackberries (“Crackberry”). The iPhone came out. RIM’s leaders sat around thinking that the iPhone was a fad and wouldn’t live up to the hype. They continued with this belief for the next two years as Apple gobbled up market share. Android does the same. Nokia gets in bed with Microsoft and POOF, the world’s former King smartphone brand is now a punchline.

So, can it be saved? Yes. Can it be saved without being bought? Er…maybe.

For all its troubles, RIM has three four things going for it:

1. Security. In today’s IT environment there are still purchasing managers who wake up in cold sweats after dreaming that the company servers were hacked via a mobile breach. It’s not that iOS, Windows Phone, or ANdroid are EASY to hack…but RIM has a long reputation of providing top-notch enterprise security on its devices.

2. Enterprise footprint – Because of #1, there are a LOT of people that wear collared shirts to work that still carry Blackberries. Granted, most of them hate the experience but the device is still on the company log nonetheless. These devices will be refreshed eventually, and while the current state of affairs indicates that most of them WON’T be new Blackberries, it never hurts to be the incumbent.

3. Keyboard. Once upon a time RIM made really SLICK hardware. My BB Bold 8900 is my all time favorite phone in terms of hardware. The keyboard was large and the texture of it made typing an absolute breeze. I could type without looking on my Bold as well as I can type without looking on a laptop.

4. Email. Even with the advancements iOS and ANdroid have made in their email systems, Blackberry still has the BEST mobile email. It syncs, it works correctly, it can be filed easily, it saves, it discards, it does everything you would ever want.

So, what does this mean for the future of RIM? FOr starters, RIM needs to cling to its strengths (above) and abandon any ideas of being a “cool” brand like Apple. The “we can be like APple!” thing nearly killed Dell 4 years ago and it is probably going to kill RIM. But until it does, RIM (and Dell, and HP, and HTC, etc) need to quit behaving like their products should carry a price premium like Apple. Next, RIM needs to find some friends….FAST. Finally, RIM needs to build a developer ecosystem ASAP.

In the past year or so, RIM has released crummy devices with crummy software and had no luck getting developers to make Apps for the BB App World Store Zone whatever its called. So its not like my ideas above are new….but how to accomplish them is.

1. Don’t issue any phone without a physical keyboard. As much as I love my iPhone I greatly miss the keyboard of my 8900. There are people out there that carry an iPhone or Android device AND a Blackberry just because of the BB keyboard making it so much easier to type. The fact that someone would carry two phones because of a single-feature that the 2nd phone is superior at (the keyboard of a BB) speaks volumes.

2. Partner up with Dell. I have advocated that Dell buy RIM for some time. Even without an outright purchase, the two brands could work well together. Dell has moved hardcore in to enterprise service sales. They sell storage and hosting and tons of services with fancy words like “Cloud” and “integrations” (plural) and “synergy”. It wouldn’t be hard for Dell to start adding mobile offerings to those huge “solutions” they are selling to enterprise. For all my sniping about Dell, they have a top-notch sales force that is adept at getting lots of different products in to lots of different places. I have no doubt that Dell’s SMB and Enterprise teams could sell the hell out of mobile IF they could sell it as part of a robust package.

3. Partner up with Microsoft. Now we’re getting somewhere. Microsoft’s investment in Nokia is likely going to pay off. By all accounts, the new Windows Phone (and Metro UI) along with Nokia’s new devices are beginning to resonate with customers. Microsoft is also getting a lot more traction with the developer community than RIM ever did. Ditch the crummy Blackberry OS with its crummy browser and crummy app selection. Go with Windows Phone.

With these partnerships, RIM will no longer be an autonomous brand with complete vertical integration of hardware and software. And that’s FINE. A device with the best keyboard available, using top-notch software that integrates with the desktop, a growing app ecosystem, and a sales force capable of getting RIM’s existing enterprise customers to re-up with a new generation of RIM devices.